Workers' comp insurer in trouble

By Frank Cho
Advertiser Staff Writer

State insurance regulators yesterday seized HIH America Insurance Co. of Hawaii Inc., the state's fourth-largest provider of workers' comp coverage, after they said they determined the company was insolvent.

Two California affiliates, HIH America Compensation and Liability Co. and Great States Insurance Co., were seized by California regulators for the same reason.

All three companies are owned by HIH America Insurance Services Inc., and owed creditors about $60 million, state officials said.

"In order to protect the interests of the public and the company's policy holders and creditors, we found it necessary to take control of the company," Wayne Metcalf, Hawai'i's state insurance commissioner, said yesterday. "We are coordinating our efforts with the California Department of Insurance in addressing this matter."

HIH Hawaii and the two California affiliates had not accepted new workers' comp business since October.

HIH Hawaii had about 5 percent of the local workers' compensation market, Metcalf said.

HIH Hawaii officials could not be reached for comment yesterday. A recording at HIH Hawaii's office in Honolulu said the phone number had been disconnected.

This is the second insurer in five months the state has seized. In November, the state took control of Hawaii Healthcare Alliance, saying that Texas-based company was insolvent.

"HIH Hawaii got into trouble not because of what it was writing in Hawai'i, but because it assumed a disproportionate amount of risk from the California business," Metcalf said.

Employers that are covered by HIH Hawaii should continue to file their workers' comp claims by sending them to P.O. Box 1350, Honolulu, HI 96807.

If assets prove insufficient, the state will turn to the Hawaii Property and Liability Insurance Guaranty Association, Metcalf said.

Frank Cho can be reached by phone at 525-8088, or by e-mail at fcho@honoluluadvertiser.com.